In 2003 client started small business paid self salary and made federal quarterly deposits. Never filed end of year or W-2 forms and 1040. IRS is after them now for 2003 1040. Business is being reported on Schedule C small profit.How do I have the money sent on the quarterly deposits put toward money owed on 1040. Money is almost all self employment tax.Do not do any payroll or payroll reports for other clients.
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The statute of limitations for claiming a refund on the 2003 1040 has expired. Any overpayment of tax due to W-2 withholding is lost.
If no 1040 return was filed, no 941, 940, W-3, or W-2 was filed, all income was Schedule C income, and the only taxes paid was those incorrectly deposited because the taxpayer thought he/she was a W-2 employee of his/her Schedule C business, then I don't know what the answer is. There are no IRS instructions for how to correct this huge of a screw up.
My guess is the W-2 withholding is lost and cannot be recovered. You could file the Schedule C, put the W-2 withholding on the 1040 as estimated taxes paid, and then see what IRS does. When they send you a rejection letter, write a letter of explanation explaining every screw up. Maybe someone at IRS would have a big laugh over the idiot taxpayer and be willing to help your client out of pity.Last edited by Bees Knees; 10-30-2008, 09:59 AM.
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I had a simular situation and had no problem switching W-2 withholding to 1040 estimated taxes. A simple telephone call did it.This post is for discussion purposes only and should be verified with other sources before actual use.
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